“Over the coming decades and across the world, Internet TV will replace linear TV.” That’s the opening statement in an 11-page document Netflix released regarding the long term vision for the company. The document also included other statements like “the linear TV channel model is ripe for replacement”, “Internet will get faster, more reliable and more available”, “Smart TVs [in more homes]“, “Tablets and Smartphones [will be used more]“, “Streaming 4k video” “TV Everywhere” and references on the success of products like the WatchESPN, HBO GO and BBC iPlayer apps.
Online (and by extension mobile) video has benefited incredibly by technological improvements, consumer behavioral shifts and as a result changes in how marketers evaluate allocation of advertising dollars. These are some of the major factors that make this the perfect time for entrepreneurs and investors to be in the space:
1. Mass availability of high speed broadband access – Internet penetration is at 78% of the US population (per Internet World Stats) or 245,203,319 people.
2. Internet video is one of the largest internet usage categories – According to ComScore, 182 million Americans watched 38.8 billion online videos in April (2013). That’s a whopping 74% of all internet users and 58% of all Americans!
3. Establishment of ad platforms that enable monetization of online videos – With YouTube being the most prominent example, the establishment of content delivery platforms that are ad supported has enabled anyone with a creative mindset and the desire to build original content to become an online video content creator. It’s also allowed the industry to evolve and become more sophisticated. Generating a million views on YouTube might still only make you a $2500 return (approx.) but it at least provides a platform where if a content creator is successful, he/she can tap into sponsors and other types of ad products.
4. Internet video advertising is incredibly more effective – This is what should excite people the most. Demographic targeting (and re-targeting), logging of unique audience views and geo-location are only some of the features that make internet video an incredibly potent marketing tool for advertisers. The industry still has some catching up to do to compete with the behemoth dollars being spent on TV but I wouldn’t bet on that taking much longer. According to that same ComScore report, those 182 million internet video watchers were exposed to 13.3 billion ads. That’s 73 ads per user! (and in a much more attention grabbing format compared to TV).
5. Online video has the attention of Hollywood creative and executive talent as well as media powerhouses – All of which is contributing to higher quality productions, acquisitions and press.
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